BANKS AND PUBLIC

Evening Post, Volume CIV, Issue 21, 25 July 1927, Page 12

BANKS AND PUBLIC

"THE COMMONWEALTH BANK

i. "Evening Post,." 2oth July. Parliament this session has frpent considerable time in discussing 'the banks trading in the' Dominion, and gave special attention to the Bank o£ New Zealand. The.peg upon, which the various debates en the banks were hung was the rise in the'overdraft rate of one-halt per cent, per-'arinuin, effective as from 9th May last. During the debates the desirableness of a St'afc bank for New Zealand was referred to, and generally as an institution greatly to b"e desired. The cry for "cheap money" foes, up unceasingly, and to the many who aye not given much thought to the subject the way to obtain cheap money is to establish a State bank. That ia what actually happened in Australia, and the Commonwealth Bank was-the outcome. When it was established it was thought by most of those, who clamoured for it the idea was that money would cheapen and the -joint stock banks would be forced out of business if they did not substantially lower their rates for accommodation and increase their facilities. In the end it was loped that the whole banking business by the Commonwealth would be nationalised. The;; right of, note issue was taken from the private'banks and given wholly to the Commonwealth Bank, and all the Government business was, as a mutter of course, given to that bank. But the Melbourne '"Arjgua" shows how experience has demonstrated that- the Commonwealth Bank has hsd*to move on sound banking linesj the same as •ther institutions of the kind. In that respect it' has conformed with general* banking conditions as prevailing within the Commonwealth and elsewhere. Its rate of interest on deposits and that charged ior transacting exchange business, as well as the advance rate, have been regulated, as with all the banks, by the requirements .of trade and industry and tho punply of available funds. The debasing of the- currency in Kussia and* Germany and the ill-effects of inflation, in other nations fortunately has been observed-by a number o£ those who fought tor-a ■ Commonwealth Bank, and they no longer preach the old doctrine of cheap 5?P c*;.. money- With knowledge in this direction, it is a pity.that before making charges against banks and other organisations they do not find ont v the exact state of affairs. .•lor instance, it is often said that the 39™. stock banks exact a higher advance rate from their customers than does the Commonwealth Bank, from its clients. If that were the case there would be a heavy flow- .of business to tho Commonwealth .Bank" The truth is that both in the matter of the advance rate and the rate ot exchange similar terms are charged by banking organisations. . -i.'l', is ,n, ot, generally understood,' although I ,vW b<|.' remarks-the "Argus," that bott Federal and State Departments'take great care vo obtain special terms from the banks for all business transacted for them. Ab-allegation has been made that some .Ctoyernrnents: have been suffering because banl-K A»rg f CS madt- by *he Joint stock bants. As far as Victoria is concerned the .quarterly averages showed thai* for the June terms at all events, the State has StaLm^ redit-. t L-abo^ 'several of the fctates, when attaining office, appears deWmed to force State banking business Ba»k Wh dS °f th-e Commonwealth Jiank. When moving in .that direction such SaX h% P?- W *?, the P°s«bilit y rf